The drop in jobless claims is especially welcome in a job market that has suffered some recent setbacks. In March, employers added only 88,000 jobs. That was a sharp drop from the previous four months, when hiring averaged 220,000 per month. The unemployment rate fell to 7.6% from 7.7%, but only because more people stopped looking for jobs.

Market watchers were quick to point out that the engines driving the stock market gains were more tenuous than turbocharged. The drop in weekly unemployment claims follows a month where U.S. job creation dropped off a cliff. The S&P's five-day winning streak is coming in just under the wire: Wednesday's gain was an unimpressive 0.01 point. And in the middle of the first-quarter earnings season, though most companies have beat analysts' expectations on profit, most are missing on revenue.

Scott Freeze, president of Street One Financial in Huntingdon Valley, Pa., thought Thursday's rise had more to do with investors believing that the world's central banks will continue with their policies of easy money, rather than any notable change in how people viewed the economy.

The market, he said, is "slowly melting up on basically nothing."

"Some of the earnings were OK, but it's more just stimulus, stimulus, stimulus," Freeze said. "As long as the world wants to print (money) ... the fears of a global slowdown are going to be muted."

Joe Heider, principal at Rehmann Group outside Cleveland, thought stocks were up mostly because investors can't think of anywhere else to put their money.

"You can leave it in cash and make nothing on it," Heider said. "You can put it in bonds and earn nothing."

Heider said he thought the latest report on jobless claims was consistent with an economy that was improving, but only incrementally. Weekly applications for unemployment benefits fell 16,000 to 339,000, the second-lowest level in more than five years, according to the Labor Department

So far this season, 1% of S&P 500 companies have beat analysts' profit expectations, according to John Butters, senior earnings analyst at FactSet. But that has come more from cost-cutting than from business going gangbusters. Fifty-six percent of those companies have missed estimates for revenue.

The trend has a precedent: Last year, less than half of S&P 500 companies beat revenue estimates in the second and third quarters, according to Butters.

The price of crude oil was up about $1.97 to about $93.40 a barrel, partly on speculation that recent weak global economic data -- in the U.S., Europe and China -- may spur more easing from global central banks, including the Federal Reserve.

Talk about possible central bank action pushed up the yield on the 10-year Treasury note rose to 1.71% from 1.7% Wednesday. And the price of gold jumped 2.2% to about $1,455 per ounce.

On Wednesday, the Dow fell 0.3% to close at 14,676.30. The S&P 500 index was flat at 1,578.79. The Nasdaq composite rose marginally to 3,269.65.

Asian stocks ended higher Thursday as mixed corporate earnings and a March slump in orders for durable goods convinced some investors that central banks will have to continue if not boost efforts to help the global economic recovery.